The Home Equity Theft Reporter

Welcome to The Home Equity Theft Reporter, a blog dedicated to informing the consumer public and the legal profession about Home Equity Theft issues. This blog will consist of information describing the various forms of Home Equity Theft and links to news reports & other informational sources from throughout the country about the victims of Home Equity Theft and what government authorities and others are doing about it.

Saturday, June 30, 2012

The government’s consumer finance watchdog says the growing market for reverse mortgages is getting confusing, and that could cost some seniors extra cash or even their homes. The Consumer Financial Protection Bureau said in a report released Thursday that reverse mortgages are not being used as Congress intended.

Reverse mortgages allow elderly homeowners to withdraw equity from their homes. The CFPB says the purpose was to provide income for borrowers during retirement. The agency’s study found that consumers are getting reverse mortgages at younger ages, increasing the risk that they will go broke later in life.

It says 70 percent of reverse mortgage borrowers receive lump-sum payments, which can be squandered quickly. Borrowers are more likely to face foreclosure because they run out of money to pay property taxes.

Judge Benjamin Culbertson has placed a temporary injunction on the homeowners association of the Ocean Forest Villas in Myrtle Beach to stop it from collecting payment from residents to repair the 30-year-old building.

“Well it means that they are allowed to do the assessment but they have to hold off on collecting the money,” said the homeowners’ association’s attorney Mark Neill. Culbertson issued the injunction Monday.

Some residents sued the homeowners’ association over a letter it sent in May saying that each owner needs to pay $15,500 within three weeks to repair the building. About 81 people are plaintiffs in the lawsuit, which represents about 50 of the 243 units at Ocean Forest. The repairs include rebuilding each balcony, supporting pilings, and fixing water leaks.

The homeowners’ association gave the residents the option of paying off the debt in installments during the next two years, if they couldn’t come up with the money immediately.

If they couldn’t pay, the homeowners’ association will add 8 percent annual interest and a $50 per month late fee to the total. If it goes unpaid beyond 60 days, the HOA will shut off the owner’s cable television service and add a $100 disconnect/reconnect fee.

The owners’ key point in their lawsuit is that these charges violate the master deed of the condos. The plaintiffs’ attorney Mark Nappier said the homeowners requested the injunction seeking immediate relief while the lawsuit works its way through the system.

Two brothers each were sentenced today to nearly two years in federal prison for conspiring to steal more than $500,000 from the Housing Authority of the City of Los Angeles (HACLA).

Diego L. Taracena, 36, and Bennett A. Taracena, 31, both of Burbank, each were each sentenced to 21 months imprisonment and ordered to pay $526,727 in restitution to HACLA.

A third brother charged in this case, Victor Taracena, managed HACLA’s construction program for public housing units occupied by disabled residents, and the money his brothers stole was intended to build accommodations that complied with the American with Disabilities Act. Victor Taracena is currently a fugitive being sought by federal authorities.

Diego Taracena and Bennett Taracena each pleaded guilty earlier this year to conspiracy charges. As part of the scheme, Diego and Bennett Taracena established four sham companies to get contracts from HACLA.

After establishing bank accounts for those sham companies, Diego and Bennet Taracena accepted $526,727 from HACLA over the course of 3½ years. Despite receiving the payments, the companies did not perform any actual work.

NH Property Owners Reach $110K Settlement With State AG Over Allegations Of Unlawful Asbestos Removal In Connection With Demolition Work

In Concord, New Hampshire, Legal Newsline reports:

New Hampshire Attorney General Michael Delaney and Department of Environmental Services Commissioner Thomas Burack have announced a $110,000 settlement with a group of landowners to resolve allegations of unlawful asbestos removal.

M&E Jespersen Realty LLC, Holgate Limited Partnership, Harrington Irrevocable Trust and William Hopkins, Jr., were named as defendants in the settlement, which was announced Thursday. Michael J. Davis, an additional party, is subject to a final default judgment.

M&E Jespersen Realty bought a Dover property from the Holgate Limited Partnership that was run by Hopkins and the Harrington Irrevocable Trust.

Michael J. Davis, doing business as Do It All Davis, is the contractor who did the demolition work on the Dover property and was responsible for the disposal of the asbestos-containing materials.

Delaney's office alleged that the state received no prior notice before the former commercial building was destroyed. Notice is required in New Hampshire regardless of whether or not asbestos is thought to be present as such notice gives the state an opportunity to determine if asbestos or asbestos abatement testing should be done.

The defendants allegedly knew or should have known that the building contained significant quantities of asbestos because they previously obtained an environmental report on the property. The report said that the building contained approximately 10,000 square feet of asbestos, mostly in mastic floor tiles and roofing material.

Like a boxer who remains standing after a bruising bout, the old gym where Smokin' Joe Frazier trained for his 1971 heavyweight title fight against Muhammad Ali has managed to withstand the ravages that have taken so many of North Broad Street's landmarks. Its fading marquee, reading "Joe Frazier's Gym," still is visible above the garish signs of the current occupant, a furniture store.

But the National Trust for Historic Preservation warned Wednesday that the 19th-century building may not be able to hold out much longer. It was just put up for sale and its future is uncertain. Fearing that Philadelphia could lose a touchstone of American boxing history, the trust put Frazier's gym on its annual roster of the country's most endangered places, one of 11 listed this year. It is the first Philadelphia building to make the list since the Boyd Theater on Chestnut Street was singled out in 2008.

The Boyd's inclusion on the list proved crucial in getting it on Philadelphia's historic register and staving off demolition, although it has yet to be redeveloped.

The trust hopes this year's citation could do the same for Frazier's gym, which is opposite Amtrak's renovated North Philadelphia station. Besides a gas station, the gym is the sole remaining structure on the block, which sits hard by the railroad viaduct. The gym was not chosen for its architectural merit, said John Gallery, who heads Philadelphia's Preservation Alliance, but because of the role it played in African American and sports history.

Frazier was a larger-than-life presence in Philadelphia who went on to mentor generations of young fighters at his gym. "We'd like to see the building preserved because it embodies the qualities of the man," Gallery said.

***

Frazier, who died last year at 67, was a dominant force in boxing for years, from the time he won an Olympic gold medal in 1964 until his retirement after his defeat by George Foreman in 1976. His long-standing rivalry with Ali also reflected the turbulent civil rights debates of the '60's and '70s. In an effort to prove his superiority over Ali, Frazier trained relentlessly in his gym's first-floor ring, and defeated him in the "Fight of the Century" at New York's Madison Square Garden in 1971.

***

The building, thought to have been built between 1888 and 1895, was acquired in 1966 by a syndicate of Philadelphia leaders interested in supporting Frazier's boxing career after he won the Olympic medal. He paid them back with his winnings. The gym's precarious condition came to the attention of the National Trust after a group of Temple University students was assigned to prepare mock nominations of endangered buildings by instructor Dennis Playdon.

A Jefferson County judge has sanctioned Bank of America $300,000 because of how it the company handled a Fannett woman's mortgage.

Trudie Crutchfield entered into several agreements with the mortgage company to catch up on her payments after Hurricane Rita. The company, though, did not hold up its end of the deals, her attorney, Wyatt Snider said, and started foreclosure proceedings against her home. The company also allowed the information to go on her credit report.

After three lawsuits against Bank of America to stop the foreclosure, Judge Bob Wortham of the 58th District Court ordered the company to pay Crutchfield $300,000.

The company must pay within 30 days or the amount doubles. Also, if the company does not fix Crutchfield's credit within 90 days, the company must pay an additional $300,000.

A federal judge in Mobile [...] sentenced the ringleader of a fraudulent Baldwin County real estate scheme to 5 years in prison and hit him in the wallet, ordering the Georgia man pay more than $5 million to his victims.

Lance A. Collins pleaded guilty in August to conspiracy to commit mail and wire fraud. His written plea agreement listed 7 condominium sales in Gulf Shores in 2006 and 2007 in which Collins or other members of the conspiracy submitted false information to mortgage companies.

***

There were indications that the damage was more extensive. At least 16 homeowners have filed suit in Jefferson and Baldwin counties over soured real estate deals involving Collins, and the plaintiffs’ attorney estimated that the defendant and others engineered at least 50 similar transactions.

According to court records, it worked like this: Collins founded and ran a company called Tradestone Industries, which also did business as Alabama Coastal Renovations. His plan was to buy older condos, renovate them and quickly resell them at a profit. He used creative financing that he picked up from watching late-night infomercials of gurus like Carleton Sheets.

Collins and others would persuade sellers to hold a "silent second mortgage" on their property, meaning that the buyer promised to make monthly mortgage payments directly to the seller. Meanwhile, the buyers would obtain a traditional mortgage without informing the lender about the seller-financed second mortgage.

When Collins or "straw purchasers," which he set up as buyers, defaulted, the commercial lenders foreclosed and the sellers ended up with no money and no property.

Two Jefferson County residents have filed suit against the person who sold them their home, [alleging] she is wrongly attempting to foreclose on them even though they have made all required payments.

Caleb and Kristal Infante Spinks allege defendant Maria Infante Brown sold them a piece of Jefferson County property for $19,350. In turn, the Spinks made their monthly payments of $252.61, according to the complaint filed June 12 in Jefferson County District Court.

Suddenly, however, Brown stopped accepting their payments, the suit states. The plaintiffs later learned that Brown did not own a clear title to the property, the complaint says.

"Plaintiffs would show they have made considerable improvements to said property and defendant is urging the lienholder on said property to foreclose on plaintiffs, or convey title to the property back to defendant," the suit states.

Thursday, June 28, 2012

Disbarred Attorney To Spend Next 13+ Years In Forced 'Retirement' In Federal Prison After Convictions In Loan Mod, Counterfeit Check Scams

In Alexandria, Virginia, The Virginian Pilot reports:

A Virginia Beach man was sentenced to more than 13 years in federal prison after admitting that he ran a mortgage-rescue scheme in Northern Virginia and, in a separate case, after being found guilty of counterfeiting checks.

Howard R. Shmuckler, 68, was sentenced Monday at the federal court in Alexandria to 90 months in prison, according to the U.S. attorney's office. He previously pleaded guilty to six counts of wire fraud.

Shmuckler, a convicted felon and disbarred attorney, operated a Vienna mortgage-rescue business known as The Shmuckler Group. From June 2008 through March 2009, the company took in nearly $2.8 million from about 865 clients whose mortgages were in distress and who came to Shmuckler looking for relief, according to court filings.

Shmuckler pocketed most of that money, obtaining mortgage relief for only 4.5 percent of those clients, the records say. Most lost their homes to foreclosure anyway. Shmuckler also was sentenced earlier this year to 75 months in prison after a jury in Washington, D.C., found him guilty of bank fraud and passing counterfeit checks.

TX Appeals Court Nixes County Tax Collector's Attempt To Back Charge Homeowners For 5 Years Of R/E Assessments After Being Left Off Appraisal Records

In Parker County, Texas, the Star Telegram reports:

Parker County officials acted outside their legal authority by assessing five years of city taxes against properties mistakenly omitted from Aledo and Willow Park tax rolls, an appeals court has ruled.

The ruling potentially affects about 300 property owners who were assessed back taxes after the error was discovered. Plaintiffs asked for a class action case to be certified, but that issue has not been decided. Property owners who sued claimed they were not validly assessed taxes for the years in question.

***

The properties in question were properly appraised for the years in question, the appeals court noted, and property owners had paid all property taxes that had been assessed.

The problem, the court said, was that the city taxing units were not listed in the appraisal records, and state law does not allow the addition of taxing units mistakenly left off of appraisal records. The court also rejected the contention that the cities and county had government immunity from such lawsuits. Suits can be brought by private parties against government officials who allegedly act without legal authority, the court said.

***

After the chief appraiser discovered the error in 2008, the Parker County Appraisal District sent tax bills to approximately 300 households notifying them that their properties had been left off of city tax rolls for tax years 2003 to 2007.

Willow Park filed suit against some property owners and began foreclosure proceedings against Todd and Valerie Brennan for not paying the assessment. The Brennans countersued, and they were joined by some of the other affected property owners in both Willow Park and Aledo.

"What's giving this thing life more than anything else is the fact we're talking about a constitutional violation," said Trey Cobb, the defendants' property tax consultant with Kirkwood and Darby. Cobb added that it felt "fantastic knowing his clients won't be door-matted anymore by the city officials, appraisal district and review board personnel that are supposed to be serving them."

***

Cobb said he would like to see the matter return directly to district court, without further appeal, for trial or settlement. The district court would then rule on the property owners' claims for declaratory judgment, for injunctive relief and for a write of mandamus compelling the tax assessor and members of the Appraisal Review Board to void the assessments and refund all taxes paid to the cities for the years in question.

Bank of America Corp. (BAC) was sued in a Florida federal court by homeowners who allege the company overcharged them for so-called force-placed insurance.

Force-placed insurance, which mortgage companies can purchase for homeowners when their policies lapse, is a “financial windfall” for Bank of America, according to a complaint filed yesterday in West Palm Beach.

“A substantial portion of the premiums are refunded to Bank of America or its affiliates and subsidiaries through various kickbacks, reinsurance and/or unwarranted commissions,” according to the homeowners, who seek to proceed on behalf of a U.S. borrowers who were charged for the insurance by Bank of America or an affiliate.

***

Joseph Gallagher, one of the Florida plaintiffs, was charged $4,491 annually for his force-placed policy even though he already had insurance, according to the complaint. The force- placed policy, which only covered wind and hail damage, was twice as expensive as Gallagher’s regular, comprehensive insurance policy, according to the complaint.

The premium payments for the force-placed policy were added to Gallagher’s monthly mortgage payment, which contributed to his home going into foreclosure, according to the suit.

Wednesday, June 27, 2012

Feds To Cut Banksters More Breaks; Will Ease 'Putback' Squeeze Felt By Lenders Required To Buy Back Crappy Mortgages

Bloomberg reports:

The Federal Housing Finance Agency, the regulator of Fannie Mae and Freddie Mac, plans to help banks avoid being forced to buy back mortgages as it becomes concerned that lenders are tightening standards even for the most creditworthy home buyers.

The FHFA will detail flaws that would trigger a putback request, Stefanie Johnson, a spokeswoman for FHFA, said in a statement. The regulator also is standardizing the data Fannie Mae and Freddie Mac collect on each loan so they have more information when buying mortgages from lenders, she said.

***

“The lenders perceive the pendulum has swung too far, and they’re being held accountable for things beyond their control,” said Brian Chappelle, a partner at the bank consulting firm Potomac Partners. “Their reaction is going to be to tighten up.”

***

Fannie Mae and Freddie Mac, which own or guarantee more than half of U.S. mortgages, are currently demanding lenders repurchase faulty loans with unpaid principal balances totaling $15.3 billion, according to their earnings statements for the first quarter.

The two companies were taken over by the U.S. government in 2008 after investments in risky mortgages brought them to the brink of bankruptcy. They’ve received about $190 billion in aid since then and the battle with banks over repurchases is part of their efforts minimize losses.

State Bar's Public Repository Of Attorneys' Names, Bar Numbers A Handy Source Of Personal Info For Identity Thieves

In Los Angeles, California, The Recorder reports:

"You're not Jerry Garcia." It was a strange thing for Max Gerald "Jerry" Garcia to hear. For that is indeed the Lewis Brisbois Bisgaard & Smith partner's name. But on this March day, neither Garcia nor this confused man standing in the Los Angeles firm's 12th floor reception area recognized each other.

The man explained that he and his mother had met an attorney at another site across town. The attorney, who identified himself as Jerry Garcia of Lewis Brisbois, said he could help with an insurance matter. And he offered the family a deal: work with him alone — keep Lewis Brisbois out of it — and he'd only collect $1,000 from them.

The mother and son agreed. But then the son couldn't reach the attorney; the address on his business card turned out to be a mail drop in La Habra. So he turned to the State Bar's website and tracked down the man he thought was his lawyer at the Lewis Brisbois office. That's when both men discovered they were the victims of an identity thief. "I don't know why someone would do something like that," the real Garcia said. "It seems like you're doomed to get caught."

Garcia that day unwittingly joined a small but growing number of California lawyers whose names and bar numbers have been co-opted by scam artists. Though their methods and motives differ, the thieves adopt real attorneys' personas and professional stature to prey on victims who may speak little English and often have no familiarity with the law.

A common scheme involves debt collection. Someone using the name of a lawyer will call or send letters to victims warning them to pay up or face criminal charges. There may or may not be a real debt. But some recipients will pay without questioning. Others get angry and track down the "attorney's" name on the bar's website. That's often the first time a lawyer learns someone has swiped his or her identity.

"It just seems to be another scam to get money," said Cecilia Horton-Billard, senior trial counsel in the State Bar's office of intake.

***

State law makes attorneys' names and bar numbers public information. The State Bar's website provides an easily accessible repository for that data — a consumer-protection measure that also provides easy identity shopping for troublemakers.

In West Palm Beach, Florida, the South Florida Business Journal reports:

Only six weeks after filing a foreclosure lawsuit against Chabad of Boca Raton, Wells Fargo Bank won a judgment that has set the temple and Jewish school up for auction.

The bank (NYSE: WFC) filed a foreclosure lawsuit on May 4 against the nonprofit Friends of Chabad of Boca Raton and Torah Tots Academy. On June 14, Palm Beach County Circuit Judge David J. Crow awarded the bank a $2.2 million foreclosure judgment after finding that Chabad was in default on a $2 million mortgage, plus interest.

Six weeks is incredibly fast for a court system that often takes years to decide a contested foreclosure. It only usually happens that fast if it is an uncontested case, but Chabad filed an answer and counterclaim. Aventura attorney Phyllis Malinski, who represents Chabad of Boca Raton in the case, could not be reached for comment.

The 23,112-square-foot building on 3.1 acres at 17950 Military Trail is set for online auction July 26. Chabad of Boca Raton holds religious services there. It also hosts its Hebrew school, its Torah Tots pre-school and its Camp Gan Israel summer program. The building was constructed in 1999.

Tuesday, June 26, 2012

89-Year Old WW II Vet Says He Was Forced To Waive Homestead Exemption Over Unwitting Failure To Disclose Assets In Bankruptcy; Now Faces Loss Of Home

In Helena, Montana, The Associated Press reports:

A World War II veteran who lists a $981 monthly Social Security check as his only income has had to move out of his western Montana home after his late wife's medical bills led him to file for bankruptcy.

Warren Bodeker, 89, was ordered by a bankruptcy judge to leave the home that he and his wife built in Plains. His case has gone viral on the Internet after the group Oathkeepers posted a YouTube video featuring him and wrote a sympathetic account of his story on its website.

Bodeker, who has prostate cancer and has been staying with friends, said he is tired from the months-long legal fight, but hopes that he can halt the sale of his home before it goes through at the end of the month.

***

Bodeker said the home and its 10-acre property is worth more than $300,000. The Bigfork attorney overseeing his bankruptcy case is selling it for $155,000.

***

The judge has ordered Bodeker to leave the home, noting that Bodeker had filed for bankruptcy relief, "which carries burdens as well as benefits;" that Bodeker had waived his homestead exemption; and that he had failed to disclose some of his assets. Those assets included a stuffed Dalls sheep head later sold by [bankruptcy trustee Christy] Brandon for $450 and gold and silver buried in his yard that Bodeker said was appraised at $66,000.

Bodeker said he did not consider the gold and silver to be an asset, because he buried it so that "we would have money to pay our property taxes and buy food and not depend on the government for welfare" if the economy soured.

He said he was threatened with charges of fraud for hiding them, so he agreed to waive his homestead exemption and allow the sale of his home. "I wanted to get the thing settled and get on with my life," he said. "I released my homestead, then they dropped the price they were selling the house for. I objected, but it didn't make any difference to (Brandon)."

***

Earlier this month, Bodeker himself was diagnosed with prostate cancer. He missed a June 12 court hearing because he was being treated for a kidney stone at a hospital in Helena, where he then found out about the cancer.

The legal and administrative fees in the bankruptcy proceedings are piling up, even after his attorney withdrew from the case this spring. Bodeker has been representing himself.

A friend who is housing Bodeker, Roxsanna Ryan, said the total cost of the creditors and fees is now estimated at $166,000. That would negate any of the proceeds he will see from the sale of the home.

Bodeker had been a paratrooper during World War II, making three combat jumps in the Philippines. He said he was part of a successful mission to free more than 2,100 prisoners at a Japanese camp. He left the Army in 1946. He said he hopes that he will be able to hire another attorney, but acknowledged that he does not know whether he will be successful in his attempts to get back his home — and if he fails, where he will go.

Couple Seeks To Undo Land Lease w/ Gas Drillers; Say They Were Duped Into Accepting Rent So Low "As To Shock The Conscience"

In Wheeling, West Virginia, The West Virginia Record reports:

Two gas drilling companies being sued by a Brooke County couple over a land lease asked this week to have the lawsuit moved to federal court.

Defendants Chesapeake Appalachia LLC, based in Oklahoma, and Statoil USA Onshore Properties Inc., based in Texas, filed their notice of removal in the U.S. District Court for the Northern District of West Virginia Monday. The plaintiffs, Ramon and Lois Bowen, sued Chesapeake, Statoil and Range Resources-Appalachia LLC, which is based in Pennsylvania, in May in Brooke County Circuit Court.

The Bowens are seeking declaratory relief and unspecified amount of compensatory damages and punitive damages for alleged "economic loss, slander of title, loss of use of their land, lost opportunity, lost profits, aggravation and inconvenience, along with all available interest, costs, attorney fees, fines and penalties."

The Bowens, [...] are claiming a breach of implied covenants, the West Virginia Consumer Credit and Protection Act, unjust enrichment, unlawful holding-over, slander of title, trespass, tort of outrage and civil conspiracy.

According to the Bowens' complaint, they entered into an oil and gas lease with Great Lakes Energy Partners LLC, now known as Range Resources, leasing their oil and gas interests to 53.10 acres of land. The lease subsequently was assigned to Chesapeake -- 73.12 percent -- and Statoil -- 26.88 percent.

Under the deal the Bowens signed in 2007, they received $50 per acre, rental payments of $7 per year and a 14 percent interest in royalties.

Now, the couple -- who claim the amounts are so low "as to shock the conscience" -- want a judge to declare the lease expired and punish the companies they allege took advantage of them.

In their notice of removal, Chesapeake and Statoil argue that federal court is the more appropriate venue since the matter in controversy exceeds $75,000 and the cases arises between citizens of different states.

City OKs Slapping Landlords With Liens For Money Owed By Trash Bill-Stiffing Tenants

In Gilroy, California, the Gilroy Dispatch reports:

A motion to place liens on 127 Gilroy properties with tenants who haven’t paid their trash bills for a minimum of 120 days reluctantly received a passing vote by the City Council Monday. Council members said they are legally bound to approve it because of city health codes.

Recology South Valley, the company that holds an exclusive trash collecting contract with the city, claims the total of outstanding bills from Gilroy homes is $35,131. Recology sent letters to homeowners with outstanding bills in April, giving them a June 15 payment deadline.

“There’s got to be a better way," Mayor Al Pinheiro said. “It doesn’t make any sense at all.” Pinheiro, a landlord himself, doesn’t understand why a homeowner is punished for a bill the tenant does not pay, questioning why Recology can’t just stop service to the tenants who don’t pay – or take some other credit action against the tenants, not the homeowner.

Recology provided Council with a list of those who haven’t paid their trash bill – about half of whom also own of the property – and how much each of them owes.

Monday, June 25, 2012

NJ Appeals Court Calls BofA On Carpet For Pulling Rug Out From Under Homeowner By Initiating Foreclosure Despite Prompt Payment History On Loan Mod

In Jefferson County, New Jersey, the Daily Record reports:

Saying Bank of America tried to “pull the rug out from under” a Jefferson Township homeowner, a state appeals court Thursday enforced a loan modification plan that will let the homeowner keep the mortgage on the almost $600,000 house she bought in 2007.

The appellate panel went so far as to say Bank of America’s tactics bordered on “unconscionability” in its dealings with Sylvia T. Ficco.

***

In its appeal, the bank claimed the loan modification was not enforceable because “there was never a meeting of the minds” since its March 2010 letter was sent in error. The bank also argued that the trial period offer was conditional and that Ficco was never offered a permanent loan modification.

The appeals court disagreed, saying the bank was bound to fulfill an offer that Ficco accepted and she reasonably relied on the bank’s urging to make regular mortgage payments.

In a footnote, the court said it was puzzled why a mortgage company would choose to continue foreclosure proceedings “against a debtor who, unlike many, is actually paying her mortgage.”

“Finally, we observe that inducing debtors to continue making mortgage payments over an extended period of time, on the promise of a loan modification, only to eventually pull the rug out from under them when they are unable to satisfy criteria beyond prompt continuing payment of the mortgage, borders on unconscionability,” the appeals court said.

FTC Continues w/ Toothless Wins Against Loan Mod, Forensic Audit Peddlers; Operators To Give Back Some Of What They Took, Promise To Never Do It Again

From the Federal Trade Commission:

The operators of an allegedly deceptive mortgage modification business will pay more than $750,000 in ill-gotten gains to settle Federal Trade Commission charges. The settlements also permanently ban the 11 defendants from selling any mortgage assistance relief products.

The FTC’s case against the four operators of the Debt Advocacy Center and another group of seven defendants that allegedly provided “forensic audits” to consumers are part of the agency’s ongoing crackdown on frauds targeting consumers in financial distress.

Sunday, June 24, 2012

The highest court in Massachusetts on Friday clarified protections in state law for homeowners facing foreclosure but said its ruling applies only to future foreclosures, disappointing some advocates who had hoped the closely watched decision would apply more broadly.

The Supreme Judicial Court ruled in the case of a Boston woman who sued after Green Tree Servicing LL sold her house to Federal National Mortgage Association, Fannie Mae, at a foreclosure sale in 2010. Henrietta Eaton’s lawyer argued that a lender does not have the right to foreclose unless it holds both the mortgage itself and the promissory note, which creates an obligation to pay the debt.

A lower court [earlier had] ruled the lender could not prove it held the promissory note and declared the foreclosure invalid. The SJC agreed with Eaton that state law requires both documents before foreclosure. But the court said its ruling applies only to future foreclosures.

Justice Margot Botsford, who wrote the unanimous opinion, said it seeks to clarify some confusion in the law about the meaning of the term “mortgagee’’ and the proper procedures a mortgagee must follow to foreclose on a property.

“We now construe the term to refer to the person or entity holding the mortgage and also either holding the mortgage note or acting on behalf of the note holder,’’ Botsford wrote.

“Further, we exercise our discretion to treat the construction announced in this decision as a new interpretation of the relevant statute, only to apply to foreclosures … after the date of this decision.’’

Samuel Levine, who argued the case before the SJC on Eaton’s behalf while he was still a student at Harvard Law School, called the case “a win’’ for Eaton and homeowners who face foreclosure in the future, but said advocates had hoped the court would apply the rule retroactively.

“We’re disappointed that the homeowners who have already lost their homes will not have any recourse under this decision,’’ Levine said. “But we think going forward it will curb the worst practices.’’

Georgetown University Law Professor Adam Levitin, who wrote a friend-of-the-court brief supporting Eaton’s position, said the decision makes clear that lenders who do not hold both the mortgage and the promissory note do not have the right to foreclose, an area of state law that until now has been ambiguous.

“It’s not an outright victory. The court was definitely concerned that if it applied the ruling retroactively, that it would cloud title for a lot of real estate in Massachusetts. They avoided that,’’ Levitin said.

Securitization Screw-Ups - Litigation Update

Georgetown University Law School Professor Adam Levitin writes in Credit Slips:

The wheels of litigation move slowly, but there are a couple of recent securitization fail litigation decisions that are worthy of note. First, in the Congress case, a wrongful foreclosure action in Alabama (see my previous blogging on it here), the Alabama appellate court reversed and remanded, a victory for the homeowner.

The reversal and remand was on a rather narrow ground, namely that the trial court applied too demanding a standard when evaluating the homeowner's argument that the allonge in the case had been fabricated. Yet this means that this securitization fail case is still alive. It's also interesting to see how suspicious some courts have become about mysteriously appearing allonges and the like.

Second, the Illinois Court of Appeals for the 2d District just issued a ruling in a commercial mortgage foreclosure case, Bank of Am. Nat'l Ass'n v. Bassman FBT, 2012 Ill. App. LEXIS 487 (Ill. App. Ct. 2d Dist. 2012), with some wide reaching implications for securitization fail arguments. It's mainly a choice of law opinion, but there are two interesting things about the case.

Heirs: Caretaker Ripped Off Our Dementia-Afflicted Granduncle Out Of Millions In Real Estate! Suit Filed To Resolve Manhattan Land Grab

In New York City, the New York Post reports:

An elderly, lonely Manhattan pharmacist was allegedly duped by a Polish immigrant and her attractive daughter into signing over his $13 million real-estate portfolio before he died — and now his family is fighting for the properties, The Post has learned.

Retired Boghen Pharmacy owner Joseph Bogen, 91 — whose family name is spelled differently from the Upper East Side business — died in 2011, leaving no children and no wife.

But when it came time to read his will, his family — including relatives of his late wife, Anna Bogen — was shocked to learn his entire fortune had been left to Elzbieta Sztuka, her daughter, Karin Michonski, and Michael Wallerstein, the daughter’s fiancé — whom the elderly man had met only five years prior.

“He was tricked!” said Michael Friedman, an attorney for Bogen’s grandnieces and grandnephews, who are fighting in Manhattan Surrogate’s Court to get back their granduncle’s millions.

Bogen was a lonely octogenarian living on the Upper East Side when he ran into Sztuka in 2006. The Polish immigrant claims he became smitten with her immediately, court papers show. “He was all alone for almost 16 years,” Sztuka said of Bogen’s time as a widow. She insisted it wasn’t his money that sparked her attention.

A Mount Sinai Hospital doctor noted a “history of dementia” in Bogen’s report during a 2010 visit, family attorneys said. “She came in and helped him clean [his home] up, helped him with his finances, cooked his meals, took him shopping and exercised a certain degree of control over him,” Friedman said.

***

Without a will, his family would have received his property under state law.

Legislation that would give North Carolina homeowners some of the strongest legal protections in the country related to fracking could be voted on by the North Carolina House [].

“Homeowners need these legal protections if North Carolina is going to move forward with fracking,” Cooper said. “Speculators are already knocking on doors, pressing people to sign leases, so we need to put these protections in place now.”

Cooper’s Consumer Protection Division studied legal and consumer protection issues relevant to fracking, including impacts on landowners, ownership of oil and gas rights, and existing legal protections. A report issued by the Attorney General in May recommended many legislative changes, most of which are included in Senate Bill 820.

The legislation, which would authorize shale gas extraction, also known as fracking, in North Carolina, was approved last week by the North Carolina Senate. The latest version of Senate Bill 820 put forward by the House Committee on the Environment adds to the bill three more key consumer protections that Cooper’s office found to be absolutely critical: [...]

CBC News: Betrayal of Trust (A CBC investigation reveals how lawyers across Canada have misappropriated and mishandled clients money, to the tune of tens of millions of dollars, or sometimes even charging vulnerable people top dollar for shoddy services)

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